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2. Ensuring your customers have correct account and routing
More choices for direct deposit number information and urging them to double-check the
accuracy of account and routing information entered on
of income tax refunds including the
their returns.
purchase of Savings Bonds The IRS assumes no responsibility for taxpayer errors in
Taxpayers have more choice and exibility for direct deposits of account or routing information.
their federal income tax refunds. They can directly deposit their • If the taxpayer omits a digit in the account or routing number
refund (or part of it) to one or more accounts at a bank or other of an account and the number does not pass IRS’ validation
nancial institution in the United States, or they can buy up to check, IRS will send a paper check for the entire refund.
$5,000 in paper series I savings bonds.
• If a taxpayer incorrectly enters account or routing
Taxpayers can continue to use the direct deposit line on Form information and the nancial institution returns the funds to
1040 to electronically send their refunds to one account. IRS Form the agency, the IRS will re-issue that portion of the refund as
8888, Allocation of Refund (Including Savings Bond Purchases) a paper check.
is required to split their refunds into more than one account or
purchase savings bonds. Taxpayers can buy bonds for themselves • If a taxpayer incorrectly enters account or routing
or others, including children or grandchildren. information resulting in a deposit to another person’s
account, the taxpayer must take corrective action through the
This gives taxpayers more options for managing their refunds
respective nancial institution to recover their funds.
— whether for immediate use or future savings — teamed with the
speed and safety of direct deposit. It’s a win-win. 3. Encouraging customers to communicate with you about
You can help your customers understand their choices, maximize direct deposits to their individual retirement arrangements.
their direct deposit options and ensure their funds arrive as
intended by: As with all IRA deposits, the account owner is responsible for
1. Informing your customers about your guidelines for informing their IRA trustee of the year for which the deposit
accepting direct deposits. is intended and for ensuring their contributions do not exceed
their annual contribution limitations. Federal income tax
The IRS will deposit a refund to any checking or savings refund direct deposits will not indicate an IRA contribution
account that is in the taxpayer’s name. In the case of refunds year. IRS instructions will stress taxpayers’ responsibilities in
on jointly led returns, the IRS will deposit the refund into an communicating with their IRA trustees and advise them that,
account of either or both spouses. For example, the IRS will unless they provide advance notication, their trustees can
deposit a joint refund into an individual retirement account of
assume the deposits are for the year in which the deposit is
one spouse. If you place restrictions on the types of accounts or
made.
ownership for which you accept direct deposits, please inform
your customers.
Speed, safety and choice — with
direct deposit you can have it all!
Split your refund among as many
as three accounts.
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